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Coronavirus: Tax reliefs and support for businesses in Scotland

01 May 2020
The Scottish government has announced specific measures to support Scottish businesses and protect the Scottish economy.

In March, the UK government announced a package of measures targeted at supporting public services, businesses and employees through this period of disruption. We have previously reported on these measures here > 

Using its devolved powers, and applying funds allocated under the Barnett formula, the Scottish government has announced specific measures to support Scottish businesses and protect the Scottish economy.

The focus in Scotland is on supporting small businesses as a priority. The Cabinet Secretary for Finance, Kate Forbes, has asked businesses to claim only what they need: "We are asking businesses who do not need this vital help to refrain from claiming additional support unless absolutely necessary so we can direct as much help as possible to those who need it most".

Small Business grant / Retail, Hospitality and Leisure grant

Businesses in the retail, hospitality, leisure and airport sectors with a rateable value between £18,001 and £51,000 may apply for a grant of £25,000. 

Ratepayers of properties with specified uses in receipt of Small Business Bonus Scheme (SBBS) relief or in receipt of Rural Relief will be eligible for the £10,000 small business grant. Businesses who are eligible for SBBS and in receipt of Nursery Relief, Disabled Relief, Business Growth Accelerator Relief, Fresh Start, Sports Relief or Enterprise Areas Relief on 17 March 2020 will also be eligible for this grant. 

Originally proposed on a 'one per business' basis, disregarding how many properties a business may operate, the Scottish government has reviewed and extended the scope of these grants. From 5 May, small business ratepayers in Scotland may apply for a further 75% of the grant value for each subsequent property that they operate in addition to the 100% grant value in respect of the first property. Such additional grants require to comply with State Aid rules.

It has been confirmed that self-catering accommodation will be eligible for the grants where it is the primary source of earned income (for example, one third of income or more) and the property is let for 140 days or more in the 2019/20 financial year. Local authorities may request such additional information as it considers necessary to confirm eligibility.

There are some differences between Scotland and England in terms of the businesses captured by the definition of retail, hospitality and leisure/tourism. There are also differences in the existing small business reliefs available in each jurisdiction. Certain property uses are excluded from each grant scheme. 

If you are in doubt about whether your business is eligible for any relief or grant under either Scottish or wider UK government scheme, please speak to us.

Business rates reliefs

There will be 100% business rates relief for premises in the retail, hospitality and leisure sectors in Scotland for the next 12 months, with no rateable value limit and no application required. Local authorities will apply the relief automatically. To qualify, the property must be occupied. The Scottish Government has clarified that properties which have temporarily closed on government Covid-19 advice will be treated as occupied for these purposes.

There will also be 100% business rates relief for 12 months for Scottish airports and organisations providing 'handling services' for scheduled passenger flights at Scottish airports.

More broadly, all non-domestic properties across Scotland will be eligible for a 1.6% rates relief on gross bills. As with the 100% retail, hospitality, leisure and airport sectors rate relief, no application is required and local authorities will apply the relief automatically.

These rates reliefs are anticipated to be temporary. There continues to be lobbying in relation to these reliefs as their application can result in a disproportionate outcome for some businesses.

Newly self-employed

A further £100m support package, split across three funds, has also been made available to help protect newly self-employed individuals and viable micro and SME businesses in distress who are not eligible for any other UK or Scottish government scheme. 

  • £34m Newly Self-Employed Hardship Fund
    Managed by Local Authorities, grants of £2,000 are available to newly self-employed individuals facing hardship who are ineligible for support under existing schemes.
  • £20m Creative, Tourism & Hospitality Enterprises Hardship Fund
    In recognition of the particular impact of Covid-19 on the sector, grants of up to £25,000 are available for creative, tourism and hospitality companies who are not in receipt of business rates relief. This fund will be managed by the Enterprise Agencies in partnership with Creative Scotland and VisitScotland.
  • £45m Pivotal Enterprise Resilience Fund
    Managed by the Enterprise Agencies, bespoke grants and business support are available to vulnerable (but viable) SME firms who are vital to the local or national economic foundations of Scotland.

Applications for support under these funds are now open and it is expected that grants will start to be paid out from early May.

Revenue Scotland

As the authority with responsibility for the collection and management of Scotland's devolved taxes (currently Land and Buildings Transaction Tax and Scottish Landfill Tax), Revenue Scotland plays an important role in the tax landscape in Scotland. As with HMRC, Revenue Scotland has changed how it delivers some services and functions to mitigate the impact of the Covid-19 virus.

Whilst the SETS online system continues to operate as normal, the telephone support desk is closed and all enquiries should be submitted electronically. Payments to Revenue Scotland should also be made electronically.

Any requests to defer the payment of LBTT must be made on a case by case basis and we will be happy to assist you with this. 

If you would like advice about this or any other tax measure in response to Covid-19, please contact the Tax team or your usual DWF contact.

Authors: Freya Gibb and Caroline Colliston

Further Reading